Union City considers extending sales tax

UNION CITY -- The city may ask residents to renew a four-year-old sales tax that has generated millions of dollars for the city.

Without the extension, a half-cent sales tax Union City voters passed in 2010 will expire April 1 next year, city leaders said. The tax pays for police, firefighters, libraries, street maintenance and other essential services, city leaders said.

Union City expects to spend 80 percent of this year's $45.4 million general fund budget on public safety and public works, according to a city budget report.

"The idea is that the tax makes us nearly $4.5 million per year, and we need that money to maintain current services," City Manager Larry Cheeves said.

As voters are asked again to help fill financial gaps, city leaders pledge that they are doing all they can to improve Union City's budget.

The City Council on Tuesday will discuss the tax, which city staffers recommend putting on the ballot. The meeting will begin at 7 p.m. at City Hall.

The measure would need the support of 50 percent of those voting plus one to pass. At least 62 percent of Union City voters likely would approve the extension, according to a telephone survey three months ago. Voter support rose to 70 percent when those surveyed were informed that the money would be spent on public safety and other essential city services, consultants said.

Union City's current total sales tax is 9.5 percent.

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Newark recently took similar steps, asking voters in November to extend a utility users tax that would charge a portion of residents' utility bills.

Union City, with about 72,000 residents, is turning to the tax because it has not seen fiscal benefits from the improving economy, city leaders said.

"The economy has not come around fast enough for us to overcome the gap we would have without the sales tax," Cheeves said. "We are in a building phase, as far as business is concerned."

Union City's lagging sales tax revenue, expected to reach about $6.8 million this year, also has contributed to the budget shortfall. While sales tax revenue has grown by 27 percent the past four years, it remains relatively small, city leaders said.

But the city has launched a number of strategies to help correct that problem, said Gloria Ortega, Union City's economic development manager.

City leaders have tried to lure more businesses with more marketing. They also launched a business incentive program that includes deferring or waiving fees new businesses usually pay; landed two new restaurants at Union Landing, the outdoor mall that is the city's retail hub; and started a merchants association to aid the small but growing number of retail businesses in the Alvarado Historic District.

Leaders also plan to survey business executives about how the city can better help them succeed, Ortega said.

"We're not trying to lean on the backs of voters," she said. "We're trying all we can to generate revenue so that we have a strong, healthy community that offers everyone the amenities that they desire."